Holiday Shopping (From a Seller's Perspective)

Brennan Zimmer

Mrs. Straub

AP Economics

November 10, 2015

Holiday Shopping (From a Seller's Perspective)

The holidays, a fun and exciting time when many families come to celebrate together. Though realistically, many holidays wouldn’t be the same without presents. This can be quite an expensive time to many families, and this is because businesses all around the world try their best to target holiday shoppers to spend as much possible. These had been getting accomplished in many different fashions, including the internet. In 2014, 61% of shoppers in the United States bought their gifts online (Wipro Digital). This is a dramatic increase from 36% of shoppers just one year earlier (Wipro Digital). The demand has increased for shoppers being able to conveniently buy deals online. This method has become more popular over the years and it’s consistently continuing to grow annually. This is one of the reasons why I sell products online.

What products exactly, you ask? Currently, I sell a wide variety of items ranging from sports memorabilia to clothing on my eBay store. What I’ve noticed, just like many other sellers is that sales start to spike throughout November and December. Specifically my sales tend to have an average increase by about 30%. Unfortunately for me, this increase doesn’t come magically, and does take strategy to make happen. Since the demand in customers has risen, the supply of the business or producers also increased on eBay’s selling platform. If one was to look at the supply curve of eBay’s active sellers, there would be a increase due to the current market demand. In order to get as many sales possible, one of my techniques are running sales on my items. This may sounds obvious, though when marketing, in my experience customers find “On Sale” more attractive than just a fixed cost of an item. According to Shopify.com, “[businesses] use this information (on sale graphics) to grab a customer's attention and cue them to take action in making a purchase.” To summarize, the prices are technically the same, but sellers in general are much better off putting a “sale” sign or graphic on their item since customer tend to get attracted discount advertisements.

Moving on, have you ever thought why businesses put the most/largest amount of discounts at the end of the year for retail/online shoppers? Some consumers believe it’s because businesses want to give the best deals to their customers for the holidays, though that’s far from the truth. The other side the story that you may not know about is businesses have to pay taxes on the amount of inventory they have in stock. Thus for a business, it’s best to sell as many items possible then it is to keep the items at normal market prices. In addition, they can’t write off any of their profits in taxes with physical inventory. When stores are able to reduce taxes they’re  maximizing profits. This is one of the behind the scene details, not all holiday shoppers have knowledge about, but is worth noting.

Lastly, I would like to turn the tables by asking you (the reader) three quick questions about holiday shopping. First, do you personally prefer to shop online or in a physical store? Secondly, have you ever shopped on eBay for gifts/presents? Thirdly, in your opinion, what attracts you to purchase gifts from the store(s) you buy from (cost, brand recognition, trust)? To conclude, the fourth quarter is a very important time for businesses, because this is where it’s time to “make it or break it”. Personally in the future, I only envision the amount of customers increasing on online platforms and the growth of online sales in the future. Many business owners including myself are looking forward to a bright looking future of online selling.

Works Cited

Khan, Humayun. “Why All Sale Signs Are Red: The Science of Color in Retail.” Physical Retail. Shopify, May 18 2014. Web. Nov 10 2015.

“No gift bag? No problem: Expert tips on novel ways to wrap presents”. Pure Minutes Mobile Long Distance. 2014 Pure Minutes. Pure Minutes Blog Team, Dec 13 2013. Web. Nov 10 2015.

Wipro Limited. “Consumers Increase Online Shopping at the Expense of Omnichannel Retailers This 2014 Holiday Season: Wipro Digital Research.” Yahoo Finance. PR Newswire, Jan 21 2015. Web. Nov 10 2015.

Corporate Ownership of MLB Teams

Shaun Campbell

Mr. Reuter

Economics

17 November 2015

Corporate Ownership of MLB Teams

The 30 teams in the MLB combine for a value of $36 billion, with an average team value of $1.2 billion. In the past couple decades or so, a new trend has surfaced, which is corporate ownership of teams, which is having a corporation own a team instead of a person. Some people think corporate ownership is bad, but in reality it has had no negative effects and has the potential to save baseball by allowing small-market teams to compete with big-market teams.

There are currently four teams owned entirely by corporations: the Atlanta Braves, the Seattle Mariners, the Toronto Blue Jays, and the Washington Nationals. The main argument against corporate ownership is that teams would be run completely for profit and not provide an entertaining, winning team to fans. A local owner would be more emotionally invested in a team, and would focus on winning as well as profits. The main ways that a team could run purely for profits would be choosing cheaper players as substitutes so they are not spending as much money on players. Teams could limit their big-name, expensive players to increase marginal costs.

This, however, has not been the case with corporate owned teams. A winning team puts fans in the seats, and a very big piece of teams’ revenue comes from ticket sales, concessions, and parking. So more fans means more money, giving owners incentive to try to win. The four corporate owned teams have payrolls ranking 6th, 10th, 12th, and 13th in the league, so slashing payrolls to maximize profits has not been an issue. When Walt Disney owned the Angels from 1999-2003 and when Fox Entertainment owned the Dodgers from 1998-1999, both companies used the teams to promote their businesses. The owners increased payroll to make the team better and make a good name for the company, and the opportunity cost of this was higher profits. The trade-off was sacrificing profits for promotion of the corporation.

Another benefit to corporate ownership is helping small-market teams compete. The MLB has no salary cap, which is a price ceiling on players’ salaries. So theoretically the more money owners have, they can pay for better players and win more, making the competition unfair. Although payroll is not necessarily associated with wins, big-market teams typically win more games and make more playoff appearances than small-market teams. Most of the teams that come under the ownership of a corporation have seen their payroll increase. The Washington Nationals were a small-market team in 2005 with a payroll ranking 23rd in the league. But the Nationals came under corporate ownership of Lerner Enterprises in 2006, and climbed up the ranks and now sit in 6th place on the payroll scale. Corporate ownership of teams could provide small-market teams with the money they need to compete. However, this could also just end up causing inflation of player salaries, because all teams would have more available money, and there is a limited supply of elite players.

Corporate ownership has the potential to save the MLB by allowing small-market teams to compete with big-market teams. But if all teams were corporate owned, it could end up just causing players’ salaries to rise. For the state it is in now, corporate ownership has not had any negative effects on the MLB and I don’t think people need to worry about it ruining baseball at the moment.

Sources

"List of Major League Baseball Principal Owners." Wikipedia. Wikimedia Foundation. Web. 13 Nov. 2015.

"MLB Team Payrolls." Major League Baseball Team Payrolls 1998-2015. Web. 13 Nov. 2015.

Ozanian, Mike. "MLB Worth $36 Billion As Team Values Hit Record $1.2 Billion Average." Forbes. Forbes Magazine, 25 Mar. 2015. Web. 13 Nov. 2015.

Woolset, Matt. "Can Corporate Ownership Save Baseball?" Forbes. Forbes Magazine, 22 Feb. 2007. Web. 13 Nov. 2015.

The Tattoo doesn't kill the Job Opportunity

Ross Thomson

Mr. Reuter

Economics B4

18 November 2015

The Tattoo Doesn’t Kill the Job Opportunity

There is a very well known saying that a tattoo will be a final decision as to if you get the job or not; basically if you have any sort of ink on your skin you are exempt from getting a job because it isn’t possible. Yet society today often consists of people challenging social normality and being an individual, and there is definitely no shortage on that; what doesn't say individuality like a tattoo?

As today’s society makes its move towards individualism, companies are able to focus more on what matters, who is going to be the best at doing the job which the person is being hired. Due to tattoos being in high demand with a 15% increase in people employed with tattoos over the past decade, consumers are able to really show that the ink in your skin really isn’t going to ruin your life.

Yet today many still consider a tattoo to be an Inferior Good studies show that many people who have a lower income are not actually in this situation because of the ink on their skin as much as it is the individual as a person itself. Studies have shown in the past that tattoos are generally on the skin of people who are more of risk takers or people who make bad choices; bad choices generally lead to things which don’t allow you to achieve success. This means that the stereotype of tattoos leading to unemployment isn’t completely because of the ink itself but the person who had not made the right choices.

While the lower income people with tattoos cause the stereotype on this elastic product, there are still employer that may actually take your tattoo into account. The most important thing in a work environment is professionalism, generally people will put tattoo’s where they can be concealed so that they are able to look completely professional if need be and this will definitely help you secure a job but other things about tattoos are taken into account as well. Another primary deciding factor on a tattoo is it’s actual meaning, this is important because there is a huge difference between a person with a tattoos of their mom’s birthday and a person with a tattoo of an upside down cross on their forehead. If a tattoo isn't appropriate for a professional workplace, sometimes people simply cannot be hired, because if you wish to have a good relationship between employees and customers, and patients, you need some level of professionalism to establish that initial bond.

Basically, a tattoo isn’t going to ruin your life or make a huge impact on your job if it isn't too much. So make the right choice about a tattoo and don’t allow it to affect professionalism in the workplace.

Works Cited

Orszag, Peter. "What Tattoos Tell Us About the Economy." BloombergView.com. Peter R Orszag, 7 Oct. 2014. Web. 18 Nov. 2015.

Hennessy, Rachel. "Tattoos No Longer A Kiss Of Death In The Workplace." Forbes. Forbes Magazine, 27 Feb. 2013. Web. 18 Nov. 2015.

Movie Theatre Revenue: Where does it go?

Abby Wannow

Mr. Reuter

Econ

16 November 2015

Movie Theater Revenue: Where Does it go?

With the soon to be released second part of Hunger Games: Mockingjay Part Two, movie theater owners must be licking their chops thinking of the amount of money they will be raking in on opening night. In fact, alone The Hunger Games opened to an astounding $155 million at the domestic box office, the third-best debut of all time and that’s just the first movie, there are three more after that (McClintock). While it seems like the revenue movie theaters will make on opening nights will increase sharply, that isn’t case.

In the USA, movies are more than just a pastime, they are an experience and finding a movie theater to watch it in isn’t hard, they aren’t scarce. In fact, in the US alone there are more than $40,000 movie theaters (NATO).This private good is only available to the people who are willing to spend $10 for a movie, and fortunately for the movie scene, that is a lot of people. While every entertainment decision includes trade-offs and opportunity costs, the value of $10 seems trivial and little. To avoid these costs, theaters will provide special offers like $5 Tuesdays and Student Thursday. These offers cause a decrease in movies demanded on days like Monday and Wednesdays because of customer expectations, customers know the price will be less the next day. However usually, because many find new movies inelastic, they are continually spending the money on a ticket even as the price rises. This inflation of prices doesn’t seem as shocking until you look at the previous prices of tickets. In 1960, a movie ticket was only $.15 and in 1980, it was $2.50. With these prices, the price of a movie ticket should be only about $7, yet this isn’t case. These overpriced tickets are due to the fact that movie theaters are a monopoly. At the time, movie theaters are the only place you can watch new movies, there is nowhere else you can watch a new movie on it’s release date and for the first few months after that. Because of this monopoly, theaters are able to charge consumers as much as they want for a ticket without losing demand.

Since the price of movie tickets have risen, movie theaters must be making a much larger profit right? Wrong. Most of the money made from ticket sales goes right back to the movie studio. During the film’s opening week, the studio usually takes 70 to 80 percent of gross box office sales. That means if a movie ticket is $10, the studio is taking $8 and leaving the theater with only $2. However, by the fifth or sixth week, the percentage the studio takes will likely decrease to about 35% (Lobb). So how are movie theaters making enough money to stay open? Pricey concessions. Without the concessions, most theaters couldn’t stay in business. Theaters are charging $8 for a small popcorn that you could buy at the grocery store for $1.50. This proves that not only movie theaters are a monopoly, but the food you buy inside them are as well. Because the food inside is the only food you can buy, suppliers are able to hike up the prices and consumers will still buy it.

When new movies are released like Hunger Games: Mockingjay Part Two, theaters will go into frenzy mode. When the Hunger Games is released, consumers tastes will change and most people will only go to the theater to see this new movie causing an increase in demand. To avoid a shortage of seats, movie theaters will create a higher equilibrium point. Because there will be an increase in demand, the movie theater will need to match this by creating an increase in supply. Thus, while theaters need to employ more workers during huge releases and work longer nights, they are essentially not bringing in much more money. So when you feel guilty about spending the amount of money you did at the concession stand, just remember you are what is keeping the theater open.

Works Cited

Lobb, Annelena. "How a Movie Theater Makes a Buck." CNNMoney. Cable News Network, 12 Mar. 2002. Web. 17 Nov. 2015.

McClintock, Pamela. "Box Office Shocker: 'Hunger Games' Third-Best Opening Weekend of All Time." The Hollywood Reporter. 25 Mar. 2012. Web. 17 Nov. 2015.

"Number of U.S. Movie Screens." NATO. Web. 17 Nov. 2015.

Cola Wars

Danna Preciado

Economics

Mr. Reuter

11/16/15

Cola Wars

War between the two largest soft drink companies, Coca Cola Company and PepsiCo has been going on since before the 1980’s. Both Coca Cola and Pepsi have secured their places in the BrandZ since 2006, Coca with a $186 billion and Pepsi with $147 billion market cap, Even though Pepsi specializes not only in beverages but also on several food products such as Lays, Doritos, Cheetos, Ruffles, etc, and Coca Cola specializes only on beverages, Coca Cola has managed to stay on top, the question is how?

The answer’s easy, tastes, or in other words, advertisement (click on link for video). Cola doesn’t focus so much on its product, Coke sells by itself, the Coca Cola Company sells an idea, an ideology. They got to the consumers through advertising characterized by “family- friendly”. Have you noticed? all of their commercials are about having moments with family and friends, sharing, laughing and connecting, they relate these positive images in our heads to Coca Cola making our subcontinent choose it over other products they also use “cute” characters such as Santa and Polar bears because this type of characters are the type that bring back childhood memories, and joy to our hearts.. Pepsi in the other hand  started with the Pepsi Challenge in which they hired popular figures to promote their product by saying they prefered Pepsi products over others also Pepsi has the  advertising strategy of  “Drink Pepsi, Get Stuff” which has also been a great success, from concert tickets to special prices . According to the Beverage Digest, Coca Cola controls 42% of the soft drink Market compared to the 30% that Pepsi controls making Coca Cola the winner in this epic war. Unfortunately for these companies, due to changing tastes and healthier consumers the demand for these products has been in decline, A research performed by IbisWorld  forecasts that per- capita soda consumption downward trend will continue and there seems to be no end to it in sight.

Knowing this, Coca Cola and Pepsi have taken some preventive measures. They both have several healthier brands Coca Cola, for example has, Powerade, Minute Maid, Vitamin Water, Gold Peak Tea  and Fuze Tea. Pepsi has Lipton, Quaker, Tropicana and Gatorade. So when people decide to substitute their regular soda for any of these products they are still technically buying from Coca Cola and Pepsi.

Work Cited

“Coca Cola Vs. Pepsi: Comparing Sales, Earnings & More.” Divided. Mitre Media. n.d. Web. 15 Nov. 2015.  

Reynolds Ben. “PepsiCo Vs. Coca- Cola: Which Stock is the Better Choice for 2015?” The Street. The Street Inc, 11 Feb. 2015. Web. 15 Nov. 2015.

Seghetti Nicole. “Coca- Cola Vs. Pepsi: The Most Valuable Soft- Drink Brand of 2014” The Motley Fool.The Motley Fool, 1 Jun, 2014. Web. 15 Nov. 2015.

MILWAUKEE BUCKS ARENA DEAL

Colin Marks

MILWAUKEE BUCKS ARENA DEAL

The Milwaukee Bucks have been in the news a lot lately, but not for the usual reasons (great performance on the court). They have been in the news because of their soon to be new arena. This new arena deal has economists up in arms. John Siegfried and Andrew Zimbalist reported in The Economics of Sports Facilities and Their Communities that “independent work on the economic impact of stadiums and arenas uniformly found that there is no statistically positive correlation between sports facility construction and economic development.”. Meanwhile owners of professional sports teams often claim that professional sports facilities and franchises are important engines of economic development in urban areas. They argue that the team contributes millions of dollars of net new spending annually and create hundreds of new jobs, and provide justification for hundreds of millions of dollars of public subsidies for the construction of many new professional sports facilities in the United States over the past decade. Neither of these conflicting statements are entirely wrong but they are not right.

The reason John Siegfried and Andrew Zimbalist are right when they say there is no statistical data is due to two items, Substitution and Leakage. Substitution occurs because teams primarily draw their attendance from the local area, and if the team weren't there, these people would still spend money on entertainment, just on different options such as a play or local restaurant. Leakage occurs because in when looking at employment, sports teams are small businesses, and many of the athletes live outside the team's home city so their taxes and revenues leak out of the city to other places. But John and Andrew are wrong because there is statistical data proving that sports teams are economically beneficial to cities. The statistical data lies in rent prices and hedonic benefits. The team itself helps the image of Milwaukee and builds pride in a city and community. This makes a sports team a nonexcludable good. Speaking on the rents according to a study published ten years ago studying cities who had lost an NFL team paired with those who gained teams between 1993 and 1999. The study found that the actual cities with an NFL team had rents that were 8% higher than those who didn’t, and the surrounding metropolitan area saw rent prices 4% higher. This is showing how teams increase the value of a city.

Now because Milwaukee already has a professional basketball team they wouldn’t receive an increase from the new arena, but if a new arena were not built the city of Milwaukee would be forced to give their team to Seattle or Las Vegas. This would cause a drop in rent/property values. The report stated that cities had 8% higher rents, but if Milwaukee’s real estate market was affected by even just 1% the city would stand to lose over $250 million over 20 years (the same amount of time allotted to pay for arena) And with predictions of more drastic changes than 1% it would be more expensive to lose the Bucks than it would be to pay for them to stay. And that is why the sports owners are right. It is more beneficial to keep a team in your city but just not for the reasons they argue.

Works Cited

Delong, Katie, and Ben Handelman. "Bucks Arena Funding Plan Passes in Madison, and Now, It's up to the City and County to Approve Their Portions." FOX6Nowcom. WITI, 28 July 2015. Web. 17 Nov. 2015.

Thompson, Bruce. "Data Wonk: The Economic Impact of a New Bucks Arena." Urban Milwaukee Data Wonk The Economic Impact of a New Bucks Arena Comments. Urban Milwaukee, Inc., 10 June 2015. Web. 17 Nov. 2015.

Black Friday

Robert Wagner

Mrs. Straub

AP Econ

17 November, 2015

Black Friday

Thanksgiving is fast approaching. While this is typically a time where we sit down and relax, give a few thanks and feast to our heart’s desire, it is also the beginning of the most stressful and intense shopping day of the year. Black Friday, a day where thousands of consumers all across the globe rush to their nearest stores to divulge into the countless savings. On a day like this, the monumental price drop results in consumer increase in demand. Also, prior to Black Friday the producers stock up on as many goods as they can, increasing the supply. While the effects of Black Friday can leave many consumers overjoyed with savings and can leave others disappointed because the desired products were all sold out, how does the day affect the economy?

In 2015, the projected Black Friday sales are much lower than the sales in the previous years. Producers are opening even earlier and lowering their prices, but opening earlier does not increase the amount of supply available. Firms in monopolistic competition will have incredibly low prices because so many of them are selling the same products. Examples of these, especially when Christmas shopping on Black Friday could be toy stores or clothes stores. People will still go take advantage of the discounts made available to them, especially in the previously mentioned industries, but experts still say that less people will be making the most of Black Friday sales. Doesn’t this indicate a slowing economy?

The opposite in fact couldn’t be more true. In 2013, an estimated 141 million americans spent their post Thanksgiving day shopping, while in 2014 an estimated 133 million americans took advantage of black Friday. That is a 5.2% decrease in shoppers, which in turn created an 11% decrease in money spent. Many people would think that a slowing in Black Friday sales would represent a slowing economy. However, it makes perfect sense that if people are not depending so much on Black Friday to shop for Christmas items that they trust in the economy more and more. There has been a steady decrease in Black Friday spending and amount of shoppers in the past few years, which means that more consumers are learning to trust in the economy and can spend their money at other times, instead of waiting for hours on end for one or two products that are marked down just a little bit. Whether or not the economy is actually improving seems to be a matter of opinion, something I will not include. However, to make your own judgement on the economy under President Obama, find some facts here.

The important idea here is that Black Friday’s decreasing sales may not be ideal for the producers and business owners/employees, but it shows that consumers these days are learning to trust more in the economy as a whole, and consumers trust is a very important piece to an improved economy in the near future.

Works Cited

Peralta, Katharine. "Black Friday Shopping May Show Improving Economy." US News. N.p., 27 Nov. 2014. Web. 17 Nov. 2015.

Tabuchi, Hiroko. "Thanksgiving Sales, for Big-Box Retailers, Are Not a Choice." The New York Times. The New York Times, 29 Oct. 2015. Web. 17 Nov. 2015.

Wikipedia. Wikimedia Foundation, n.d. Web. 17 Nov. 2015.

Zumbrun, Josh. "Have Most Economic Indicators Improved Under Obama?" Real Time Economics RSS. Wall Street Journal, 4 Aug. 2014. Web. 17 Nov. 2015.